WARSAW (Reuters) – Polish central bank Governor Adam Glapinski said on Thursday there were no reasons for cutting interest rates at the moment due to the outlook for inflation and he did not think that the current level of rates was a barrier to economic growth.
Poland’s central bank, or NBP, left its main interest rate unchanged at 5.75% as expected on Wednesday.
“The current strong increase in inflation, with still high wage dynamics, although decreasing, with increased core inflation and ongoing economic recovery and loose fiscal policy do not provide any grounds for lowering interest rates at the moment,” he told reporters.
“The current level of NBP interest rates is not a significant barrier to the development of the economy and investments.”
In an interview on Thursday evening, Poland’s finance minister said it was basic macroeconomic knowledge that high borrowing costs hamper investments.
“Higher interest rates have a negative impact on investments, on the ability of Poles to invest in the economy, and also on higher loan instalments … This is not an evaluation of the NBP’s actions, this is a statement of certain facts,” Andrzej Domanski told public broadcaster TVP Info.
“The fact is that interest rates in many European countries have already been significantly reduced, similarly in the United States. Not in Poland,” he said.
The Czech central bank resumed its rate cut cycle in February, while the Hungarian central bank has kept borrowing costs steady since September after easing worth a combined 11.5 percentage points. Last week the European Central Bank lowered its interest rates for the sixth time since June.
Glapinski’s stance has pitted the governor against Prime Minister Donald Tusk’s ruling coalition, whose officials have repeatedly called for reductions in what they see as onerous borrowing costs weighing on the economy.
On Wednesday, the NBP trimmed its inflation forecast for 2025 but raised its prediction for 2026 in its March projections, raising the risk that price growth could remain above the bank’s target range throughout next year.
Glapinski said during Thursday’s conference that inflation would return to the central bank’s target of 2.5% only in 2027 after ending 2025 at around 5% year on year, with core CPI at 4% throughout the year.
Even though Glapinski sees no scope for rates cuts now, he said the central bank did start discussing when they could come.
“The majority of the Council asked to say that almost all Council representatives – not all, but many – were analysing the possibility of a rate cut and when it could take place,” he said.
(Reporting by Karol Badohal, Alan Charlish and Pawel Florkiewicz; Writing by Anna Wlodarczak-Semczuk; Editing by Alison Williams and Daniel Wallis)
